On The Welfare Benefits of an International Currency
March 1, 2007
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Summary
Is it beneficial for a country's currency to be used internationally? And, if so, can we quantify the benefit? Since the emergence of the euro, there has been great interest in the consequences of a transfer of the US dollar's premier international role to the euro. Building on recent advancements in the literature on search models of money, this paper presents a novel model-based approach towards assessing the welfare benefits associated with the international use of a country's currency. The welfare gain for the Euro area in having the euro internationally used ranges from 1.7% to 2.1% of consumption.
Subject: Consumption, Currencies, Demand for money, Inflation, Monetary base
Keywords: inflation rate, WP
Pages:
37
Volume:
2007
DOI:
Issue:
049
Series:
Working Paper No. 2007/049
Stock No:
WPIEA2007049
ISBN:
9781451866131
ISSN:
1018-5941
